Assaluyeh, Iran (Platts)--22Feb2012/833 am EST/1333 GMT

Iran's Pars Oil and Gas Company said Wednesday production capacity from the offshore South Pars gas field, an extension of Qatar's North Field, was producing 290 million cubic meters a day and it rejected suggestions that Qatar's gas production was significantly higher than Iran's.

Iran and Qatar have the second and largest natural gas reserves respectively after Russia. Qatar is the largest exporter of LNG with current capacity of 77 million mt/year after rapid development of the North Field, which contains 900 Tcf of natural gas reserves.

Iran's exploitation of South Pars, which contains around half of total reserves of 1,045.7 Tcf, has been slower because of international sanctions.

Speaking at an energy conference in the gas hub of Assaluyeh on the Persian Gulf, POGC managing director Mousa Souri said production capacity had risen to 290 million cu m/d in the past month, after phases 9 and 10 were brought fully online. South Pars is being developed in 28 main phases but several are behind schedule.

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"Some media say that exploitation by our rival is several times higher than Iran's from the South Pars gas field. This is not true. Qatar is not exploiting even two times more than Iran. Its exploitation is less than double Iran's," Souri said.

He added that he hoped Iran would catch up with Qatar before 2016.

Souri, whose company is in charge of South Pars development projects, said that 18 standard phases (with a production target of 25 million cu m/d of gas for each phase) have yet to be completed.

In addition to natural gas reserves, South Pars also holds 19 billion barrels of condensates as well as 7.5 billion barrels of oil in place, Souri said. It also has 28% of the world's total helium reserves, he added.

"Last [Iranian] year, we exploited 83 billion cu m of gas, which was 5.5 Bcm higher than the preceding year," he said.

Referring to the South Pars oil layer, Souri said production would start in the second half of the next Iranian year, which starts on March 20. "The company's perspective is to produce 1 Bcm/day of gas, 800 million cu m from shared parts [with Qatar] and 200 million cu m from independent sectors," Souri said.

As for obstacles in the way of South Pars development, Souri pointed to finance, transfer of foreign currency from Iran, the young structure of general contractors in procurement, services and design and implementation of projects as well as a severe shortage of human resources.

He called on the foreign ministry and on the ministries of industry, mines and trade to help support the mega projects with regard to the transfer of goods from abroad and foreign currency.

He put the total investment needed for the current Iranian year at $21 billion, and said $11 billion had been secured.

Souri also reiterated a previous warning about the inefficiency of some contractors involved in the development projects.

"Many of the projects are excellent, some projects are behind schedule because of the contractors' management. Those contractors that cannot make up for their weak points, could face the challenge of either losing a part of their job or being removed from the project," he said.

The Iranian oil ministry awarded South Pars projects abandoned by foreign oil companies to domestic contractors, which have neither the manpower nor the advanced technology to complete the projects on time.

Iran has said that it wants to speed up development of phases adjacent to the North Field because of fears of depletion in those zones.

Qatar has imposed a moratorium on further development of the North Field pending completion of a reservoir study to assess the impact of its rapid development. South Pars and the North Field are the largest concentrations of non-associated gas in the world.

--Aresu Eqbali, newsdesk@platts.com

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